HC Deb 31 January 1939 vol 343 cc27-34
49. Sir J. Mellor

asked the Chancellor of the Exchequer whether he is now in a position to announce the Government's intention with regard to the compensation of owners of property in the event of damage arising out of hostilities?

Sir J. Simon

A statement has been prepared setting out the Government's proposals in regard to all aspects of this question. The statement is necessarily of some length, and with your permission, Sir, I will make it after Questions.


Sir J. Simon

Mr. Speaker, I take this opportunity, with your permission and with the leave of the House, to state the conclusions reached by the Government on the subject of compensation from public funds in respect of loss or injury caused to persons or property in this country arising from enemy action, such as bombardment from the air or from the sea, or from counter-action taken against any such attacks. The general principle which the Government think should be applied is that such loss or injury ought not to be treated as merely the concern of those who directly suffer it, but must be regarded as falling upon the community as a whole, and consequently as constituting a proper subject for compensation from public funds. In other words, the loss ought not to be left to lie where it happens to fall, for the risk is one which affects us all, and the particular person or particular property which is struck is the casual victim of a general peril which the State is engaged in doing its utmost to resist and counteract.

As regards individuals, the Government have had under consideration arrangements for giving compensation from public funds in respect of death or of injury involving serious disablement caused by air raids or other warlike action. A scheme is being worked out to cover casualties to civilians, its purport being that, in addition to persons enrolled as volunteers in air raid or other such services who might be injured or killed while on duty, the scheme would apply to casualties among civilians wholly or mainly dependent for their livelihood upon their employment or occupation. Provision will also have to be made in the scheme for other cases where need arises. The rate of compensation for persons injured or for dependent widows or children of persons killed, would, broadly speaking, be calculated by reference to the standard rate of compensation and to the conditions applicable to the private soldier recruited for service in connection with the same hostilities.

As regards members of the Mercantile Marine, it is proposed that in the event of their death or injury due to war perils at sea, compensation shall be payable on the basis of rates applicable to personnel recruited for service in the Royal Navy during the same hostilities.

As regards the various types of private property—houses, furniture, factories, stock in trade, etc., the problem presents many grave complications. The suggestion has been made that the Government might institute an insurance scheme, collecting premiums from owners and undertaking to pay in full for any subsequent damage whatever may be its extent. This proposal has been exhaustively examined, and the insuperable difficulty is that no possible basis for an actuarial calculation exists. If the total damage was slight, then no doubt the compulsory exaction of a substantial premium from every owner of private property in the country at regular intervals might over a period build up a sufficient fund, though the management of such a fund would present difficulties of its own. But, equally, if the damage was heavy and prolonged, the fund so built up might be wholly inadequate, and to avoid this risk as far as possible premiums might have to be raised to a figure not generally acceptable and not suitable for compulsory and universal collection. It is these considerations, no doubt, which have led those carrying on the business of insurance to decline this class of insurance, for the risk is not in fact an insurable proposition. The Government, therefore, cannot contemplate a scheme which would commit the community to so vague and indeterminate a liability. That does not mean in the least that individual properties which suffer ought to be left to bear the loss unaided, but that the compensation should be on the highest scale compatible with the circumstances of the country after and not before a conflict. When the extent of the damage to property in private ownership is known, such contribution will be made from public funds as the circumstances make possible, in accordance with a scale which would, at any rate, pay in full up to a certain limit of loss and thereafter would be graded. Although compensation cannot be made available until the total losses are known at the end of such a conflict, it would be necessary to assess damage as soon as possible after it occurred in each case, and a scheme has been drawn up for this purpose which can be put into operation immediately it is required.

There will be a compensation board presided over by one of His Majesty's Judges, and the collection of claims and recording of damage will be in the hands of the Valuation Office of the Inland Revenue as a nucleus, with additional professional assistance. Various questions affecting the contractual relations between freeholders, leaseholders and other persons interested in property must be specially dealt with. These problems have been examined by a committee appointed by the Lord Chancellor, the report of which will be published immediately.

I have dealt so far with private property in general, but I must now mention certain particular categories of property. The necessary deferment of compensation until the end of the emergency would, in the absence of special steps, result in the holding up of necessary repairs to essential property which has been damaged. Accordingly a plan has been worked out for the emergency reconstruction of essential property including, where necessary, housing accommodation.

No less urgent is the question of stocks of commodities. Stock in trade is quantitatively a very much smaller problem than that of property in general and from the point of view of the community as a whole it is vital to secure the continued flow of necessary supplies to this country upon which our existence during the emergency would largely depend. Such imports are financed on the basis that they will be disposed of in due course after being brought here. If they are destroyed by enemy action the private finance to import other goods in their place may not be available.

Our plans in this connection are twofold. In the first place we shall shortly announce a comprehensive scheme for marine war risks. So far as hulls are concerned, the Government have made an arrangement with the several mutual war risks associations in this country under which they will re-insure the associations, up to 80 per cent. of the value of the ships as fixed under the agreement, in respect of claims arising out of loss or damage due to action by or against the King's enemies. The re-insurance will be without premium for voyages which are current when an emergency arises, and thereafter will be on a premium basis. The principle of the scheme for cargo insurance is that those customarily offering insurance of such risks will form a pool and the pool will be able to re-insure King's enemy risks with the Government. This scheme is designed to operate in time of peace with the special object that by giving complete cover to all engaged in trade there should be no check to the flow of goods into and out of the country during any period of anxiety or emergency. Comparable facilities will also be made available in time of war. There will also be a scheme to cover goods between ship and warehouse.

As regards essential stocks on land, we have found it practicable to devise an insurance plan. This will cover all goods which, in the opinion of the Board of Trade, are essential to the life of the community during war, including the maintenance of the export trade. The scheme will be worked through the fire insurance companies and Lloyd's. As the owners of such goods will receive compensation in full immediately, a premium will be charged in war. There will be no. premium in peace, but it will be necessary for the persons concerned to register at a nominal fee sufficient to cover expenses with their insurer and they will be allowed to ask for endorsements of their policies as required from time to time. In war the scheme would be compulsory and the fee for delayed registration would be increased. This scheme will cover all goods of the class I have mentioned whether they are raw materials, commodities or in course of manufacture, and the scheme applies to importers, manufacturers and merchants. Retail trade, owing to its diversity and to the great numbers of traders involved, represents an especially difficult problem, details of which are still under examination. But it is our intention in one form or another to cover retailers who stock essential commodities against damage to those stocks.

In framing the plans, of which I have now given the outline to the House, we have had the advantage of consultation with the insurance companies and, as I have already said to the House, the scheme for insuring essential stocks will be worked on behalf of the Government through the fire insurance companies and Lloyd's. But it is right to emphasise that the scheme is a Government scheme and no responsibility for it attaches to the insurance companies.

Mr. Attlee

Is it intended to introduce legislation to deal with this matter?

Sir J. Simon

There will have to be legislation.

Mr. Attlee

Can the right hon. Gentleman indicate when we are likely to have it?

Sir J. Simon

I cannot say. I cannot give a very clear and precise indication on that point to-day, but it is a matter that we ought to deal with as soon as we can.

Colonel Nathan

Will there be an opportunity for debating the statement on the White Paper about to be published, before the framing or the introduction of the projected legislation?

Sir J. Simon

I should have thought that the opportunity would arise on the legislation. It is not, however, for me to decide.

Colonel Nathan

May I ask the right hon. Gentleman whether he appreciates the urgency of making some definite pronouncement on this matter, in the most precise terms, having regard to the fact that the statement he has made with regard to compensation to individuals is likely to have a very depressing effect, and having regard also to the fact that the statement he has made in regard to compensation for property at large is likely to make insecure many of the assets at present possessed by insurance companies and building societies?

Sir J. Simon

I think the hon. and gallant Member should consider at leisure the statement that I have made. As far as persons are concerned, I should have thought that it was a very clear decision that civilians who happened to be injured in an air raid should be treated on a level with soldiers on service. As regards property, it has not been possible to suggest that there should be an all-in scheme of insurance. The statement that I have made is quite definite on that point.

Mr. Parker

Will it be possible for people whose property has been damaged, people who are buying their own houses, to get compensation to carry out the necessary repairs promptly?

Sir J. Simon

That question is an example of the necessity for studying the statement. I am sorry that I had to read it rather fast. If the hon. Member studies the statement he will find that included in it we recognise that, where it was necessary, provision would be made for the immediate reconstruction of essential housing accommodation.

Sir J. Nall

Can my right hon. Friend say whether it is intended that the premium for general merchandise will be fixed in advance, or whether it is intended to leave it to be varied or fixed during the time of the emergency? Is he aware that the latter course would largely nullify the intention that he has in mind?

Sir J. Simon

I do not think it would. In the case of stocks which are being replenished at intervals, every two months or so, if experience went to show that a higher premium was needed it would be necessary to charge it. One of the distinctions between stocks and some other things is that the owner of the stocks has the opportunity, and rightly so, of considering the element of outlay for premium in settling prices.

Sir J. Nall

Does my right hon. Friend appreciate that in the last emergency excessive premiums, which were much more than in the case of 1914, were demanded? I understand that the whole object of the scheme is to avoid such a position arising again.

Sir J. Simon

I may have misunderstood my hon. Friend's question. If he was referring to the insurance of cargoes and not of stocks on land, I think he will find the matter dealt with.

Mr. Gallacher

In regard to the right hon. Gentleman's reference to compensation for injury or death, will he consider overhauling the present Compensation Acts in order to prevent an increase of the anomalies that exist at the present time?

Mr. Garro Jones rose

Mr. Speaker

I think it would be better to put further questions on this subject on the Paper.

Mr. Garro Jones

May I ask a supplementary question about an aspect of war insurance which has been completely omitted from the statement? I would ask the right hon. Gentleman whether he will take it into consideration before arriving at his general policy. Is he aware that during the last War many members of the combatant services had their life insurance premiums increased by as much as 20 to 30 per cent.? Will he take that into consideration in devising his policy for war risks insurance?

Sir J. Simon

This scheme, wide as it is, is really addressed to damage and loss inflicted by air raids in this country. It is not really dealing with the subject of combatants who have private contracts with insurance companies. No doubt a question could be put down about that, but I did not purport to deal with it in the statement.

Mr. Pethick-Lawrence

Am I to understand that so far as stocks of commodities in this country are concerned the cost of compensation is to be borne by premiums, whereas in the case of the destruction of property it is to be borne out of general taxation?

Sir J. Simon

That is not, I think, a fair way of putting the contrast. In the case of stocks which have to be constantly renewed, it is possible to make a provision by which essential stocks will be replenished at once by payment of their full value, and as they are disposed of, no doubt the premium would show its effect in prices. In the case of property, it is impossible to undertake to rebuild everything during the conflict, or to indicate how far compensation will be ultimately available, and it is impossible to indicate definitely how far it will be possible to grant compensation.